Few assets have encountered a sharp role reversal as the meme-favourite cryptocurrency Dogecoin (DOGE-USD). Long a cult classic among hardcore crypto fans, DOGE went mainstream last year, in no small part due to Tesla (NASDAQ: TSLA) CEO Elon Musk and his seemingly nonstop marketing campaign. However, 2022 has rendered the meme coin almost an afterthought, leaving investors confused about its potential.
What is Dogechain?
Dogechain is a newly launched blockchain that promises to bring utility to $DOGE holders through DeFi, NFTs and Decentralized Applications (dApps).
Dogechain touts itself as a “Layer 2 solution for Dogecoin” by providing utility and scalability. However, one must be clear that Dogechain is not a real Layer-2 solution for Dogecoin as it is not built on the same DOGE network. Instead, Dogechain is an EVM-compatible blockchain built on Polygon Edge.
Dogecoin holders can bridge their $DOGE over to Dogechain, receiving Wrapped Dogecoin ($wDOGE) in return which can then be used to interact with DeFi apps, NFT marketplaces, dApps and more. $DOGE can also be used to pay transaction fees on Dogechain.
There are a few DEXes live on Dogechain (DogeSwap, Yodeswap, KibbleSwap etc.). Some of the top tokens are Doge Eat Doge ($OMNOM), Meta Doge ($METADOGE) and Shiba Inu ($SHIB).
Dogechain has also recently launched its native token ($DC), rewarding community members with a fair airdrop for their ongoing support. (More on that later)
Why have its blockchain?
It all boils down to scalability—Ethereum’s popularity results in an over-saturated network with exorbitant gas fees. Hence by deploying on a standalone, scalable EVM-compatible blockchain, it can cater to the demand of the rising number of $DOGE users while keeping transactions fast and costs low.
Given that Dogechain is a PoS (Proof of Stake) blockchain, users can stake various tokens to receive rewards for helping maintain the network.
Dogechain users will be able to choose between three different staking models:
- Users who stake $wDOGE on Dogechain will help provide security to help uphold the network. In return, they’ll receive rewards denominated in $DC for their efforts.
- $DC can be directly staked on Dogechain to earn additional $DC rewards.
- Users who stake $DC into the Dogechain Ve model will receive $veDC tokens. A vesting duration can be chosen anywhere between 1 week to 4 years — the longer you vest, the more $DC you’ll receive in rewards, directly translating into higher $veDC rewards.
These models ensure that both $DC and native $DOGE holders can get a piece of the pie and receive rewards for contributing to the chain.
Dogechain - Tokenomics & Governance
On Aug 24th, Dogechain released their updated DC tokenomics to provide the community additional value to hop onto Dogechain and start using DOGE for more than just holding and trading.
DC tokens will be essential for making governance decisions regarding the further development of Dogechain, paying transaction fees, and setting up validator nodes.
Dogechain increased the airdrop size from 2% to 12% and broke it down into two categories:
- Early Shibes Airdrop: 3% of the supply will be distributed to wDOGE holders; 15% of these tokens will be released right upon token launch, while the remainder will be released linearly over the next year.
- Loyal Shibes Airdrop: 9% of the supply will be distributed as intermittent airdrops following the Early Shibes Airdrop for two years.
With this, instead of requiring users to stake tokens and locking them up, the protocol will take intermittent snapshots of users’ wallet holdings and distribute DC token rewards following an average of these holdings over the past month, on the 1st of the following month.
Here is a sky overview of allocations:
- Community allocations breakdown - 58% (Ecosystem DAO Fund, Network Operations, Airdrops, Polygon Reserve, Robinhood Reserve)
- Remaining allocations - 42% (Contributing team members, Foundation, Treasury, Marketing & Advisors, Initial liquidity and Market-Making)
Dogechain operates as a DAO (Decentralized Autonomous Organization). To participate in governance activities, DC token holders are required to lock their tokens up for four years.
Holders will receive governance tokens (veDC) relative to the number of DC tokens locked and chosen lock-up period. veDC is used on the governance portal to vote on active or improvement proposals.
In addition to an airdrop, DC tokens will also be available on three decentralized exchanges, namely:
Just a few days back, Dogecoin made improvements to Dogechain. Here are some underlying issues that were fixed:
- Explorer has been upgraded to scale with the increased usage
- A critical wallet security upgrade was implemented
- QuickSwap released the first audited and officially supported DEX.
- Dogechain partnered with Multi Chain Org to provide 3rd partry on-off ramps to Dogechain.
- SynapseProtocol integrated Dogechain into their cross-chain messaging system and value bridge.
- Implemented a live display of $wDoge currently on Dogechain.
Thoughts & Conclusion
The launch of Dogechain is extremely valuable for the Dogecoin ecosystem, as it adds additional utility to the otherwise useless meme coin.
However, Dogechain has some hurdles to overcome before any actual adoption can take place.
Firstly, even though there has been a price pump recently, it came nowhere close to even $0.10. Subsequently, the price quickly dipped back down, leading to the belief that the pump was pure speculation and that not many people were willing to hold through, especially in current market conditions.
Also, most of Dogechain’s infrastructures are still in their earliest stage of development and might be prone to instabilities, grave malfunctioning, and exploitation. DOGE holders should also take time to master the bridging procedure to avoid losing assets to erroneous bridging.
People have also likened Dogechain to BNB Chain (formerly BSC), where pump-and-dump schemes are prevalent due to how easy it is to launch tokens/protocols. Co-Founder of QuickSwap Roc Zacharias also tweeted that “it’s the Wild West on Dogechain” and that investors should “Be careful and DYOR.”